Wednesday, May 23, 2018

For years I've had a number of posts linking Truck Tonnage to equity prices, and they've all been impressive—in the sense that the physical volume of trucking activity has had a strong tendency to track equity prices. I can't say which leads which, but when they move together they appear to be self-validating.

Chart #1

As Chart #1 shows, truck tonnage has surged 9.5% in the year ending April '18, and the S&P 500 Index is up almost 14% over the same period. Both have experienced substantial growth since Trump's election, in what might be called a "Trump Bump." This further suggests that the economy's growth rate is picking up.

Re GDP growth: GDP growth in the year ending last March (the first quarter of last year was Obama's achievement, not Trump's) was 2.9%. if growth in the current quarter meets expectations (3.5% annualized, based on the average of the Atlanta and NY Fed's estimates), then the annualized growth rate of the economy since the end of Q1/17 will be 3.0%. I'm not declaring victory yet for Trump, but things seem to be moving in the right direction.

Their final 1Q 2018 prediction was close to reality,and usually is by the end of the quarter.

This happens almost every quarter with GDP NOW.

I'll try to resist commenting again until the end of the year,so as not to annoy you, and we will see what happened.I've moved from about 65% to 85% cash in my investment portfolios for this year.My biggest concern is a trade war with China.

I can't see Trump doing nothing and then in October he would have to admit he accomplishedvery little on the trade deficit (and illegal immigration too.)

You might want to mention the Chinese reduced their tariff on imported autos from 25% to 15% -- at least theyannounced they were going to do that. We still have a 2.5% tariffon any auto imports from China.

Like Scott Grannis, I think the corporate income tax cut will boost real growth, and may not hurt tax revenue that much. (There is an issue of reported income switching from personal to corporate, driving a loss of revenue for that reason as well, but set that aside).

Scott Grannis is expecting real growth possibly higher than the 2% drudge we have been in. I want that too.

But fear your own central bank...

The US Fed declares the long-run sustainable real growth rate of the US economy is…1.8%.

The central bank also says the long-term sustainable minimum unemployment rate is 4.7%.